Discussion Topics
1. A recent empirical study shows that free-play offers are not producing incremental profits. Should we stop offering free-play offers? How should we proceed?
2. Should we continue to offer Bingo & Keno in our repeater market casino, despite shrinking demand for the games?
3. We must reduce payroll costs by 15%, due to a decline in business volume that appears to be part of a long-term trend. Should we reduce everyone’s pay and benefits, or terminate employees to comply with the payroll reduction mandate?
4. One group of managers is pushing for promotional activity to spur the slow midweek period, while another camp is touting weekend promotions to sway patrons when they are actually making the decision to visit a casino. While both arguments have merit, there are insufficient resources to pursue both strategies. As GM, which strategy would you
pursue? How would you address the concerns from the group opting for the opposing strategy?
5. The GM tells you that the slot floor is “full” when it is 2/3 occupied, which occurs about 5 days per year. As director of slots, should you reconfigure the slot floor? Should you reduce the number of games on the floor? Will this cause a problematic decrease in the variety of games offered (i.e., the game mix)? Owing to the physical dimensions of slot machines, and the possible configuration of units, is it possible to regularly achieve occupancy above 80%? What about the crowding sensation? If no one is playing the games, shouldn’t we use the floor space for something else, in order to maximize cash flows?
6. As the entertainment director, you are concerned about the recent budget cuts imposed on your department. Your department’s profit margin is well below that of the overall property. How could you defend the entertainment budget?
7. As the director of finance, a recent survey shows that the accounting department has the lowest employee morale in the company. This is one of your departments. The GM is unimpressed by your leadership, and asks you to advance a plan to improve morale. What do you do?
8. Business is off in the pit. The GM has asked you to create a plan for improving the situation. The GM is pushing for $5 blackjack and has asked for your feedback. Make a list of items you would need to know to respond to the GM’s suggestion. Specifically, list the items you would need to consider to assess the profitability of this idea.
9. A study shows that slot players prefer pods over banks. While the marketers are pushing for more pods, the slot operators are defending the bank configuration. The marketers hold that the casino should offer the configuration that players prefer, while slot department is concerned that the reduction in units will decrease product variety and
revenues. As the planning and analysis manager, the GM has asked you to advise him regarding this matter. What is your recommendation? Please provide your rationale.
10. The new CEO has told all the GM’s that their goal is to achieve 100% loyalty from their players. That is, GM’s are to restructure their organizations, operating strategies, and marketing activities to obtain 100% share of their players’ gaming wallet. Is this a constructive goal? Explain your position. How would you address the notions of variety seeking and polygamous loyalty? Assuming you did not feel this was an appropriate goal, how would you express an alternative loyalty-related goal? That is, how might you revise the 100%-loyalty goal?
11. Key corporate officers have asked you to weigh-in on the remodeling of the Egyptian-themed Luxor. Although the theme pervades the interior of the pyramid-shaped casino, there are those in management who feel the interior of the casino should be remodeled such that the theme is eliminated. That is, they feel that the interior of the casino should be remodeled in phases to gradually replace the tired Egyptian theme with a more modern and sophisticated décor scheme. This new décor would not have an overt theme, making future remodeling an easier task. These managers hold that themes have a finite life in the mind of the customer, and constrain management’s ability to create new experiences and reasons for customers to make return visits. How would you advise the corporate office on this matter?
12. You are the General Manager (GM) of a successful Indian casino resort in Southern California. You are considering a dead chip program for your property. Such a program will introduce table game bettors who wager in excess of $10,000 per hand. To attract such players, the program refunds about 50% of the casino’s t-win. Although approximately 75% of gaming revenues (and profits) come from slot operations, the tribe pays no gaming taxes on table game revenues. This is a political issue, as the tribe just unsuccessfully renegotiated its tax structure (on slot win) with the State of California. The tribe pays no taxes on table game win. The casino’s best existing table game players wager around $1,500 per hand, so the dead chip players will introduce considerable volatility to the table game operating cash flows. This volatility is an issue, as the tribe is governed by elected officials who do not want to explain why tribal disbursements have decreased during their tenure. On the other hand, tribal officials have mentioned their frustration with the new tax structure in slots, which has decreased casino profitability. Your goal is to prevent a decrease in the casino’s earnings, and, ultimately, in the tribal disbursement. As GM, is the dead chip program something you would pursue? If tribal officials are forced to decrease the monthly tribal disbursement, your job may be in jeopardy.
13. While the Sands operates two Las Vegas megaresorts and one property in Pennsylvania, its four hotel-casinos in Asia provide 80% of the company’s earnings. Working within that structure, Sands executives decided to drastically decrease comp awards to casino players at the two Las Vegas Strip resorts (i.e., Venetian and Palazzo). Top-tier players still receive offers and comps as always, but all levels of players below the top-tier receive considerably less in the forms of comps, specifically in the area of a priori trip incentives.
These properties both rely heavily on hotel profits, stemming from a high average room rate garnered from conventioneers. The onsite Sands Expo & Convention Center allows these properties to more aggressively pursue this high ADR segment. Both properties also receive a steady stream of profit from their extensive retail outlets and restaurants. The casino also produces steady profits, with the majority coming from slot operations. These players still earn comps and discounts from accumulating points on carded play. Table game players also continue to earn comps and discounts from tracked play. However, offers designed to lure players to Las Vegas by providing a free hotel room (before receiving any play from the customer) were drastically reduced if not eliminated. This included RFB offers in conjunction with gaming tournaments and special events designed to entice players to make a trip to Las Vegas. The new policy was implemented rather abruptly, requiring hosts to advise some of their players of revised offer terms with as few 48 hours notice. That is, some players had to choose between accepting sudden, unexpected, and considerable room costs and canceling their trip. Many chose the latter. Again, exceptions to the new comp/offer policy will be made for the top-tier players.
After one month under the new policy, the year-over-year increase in profits was 42%. Do you think this increase will be sustainable? Are there any likely long-term effects resulting from this somewhat abrupt change in policy? Do you support this strategy? What are the arguments for and against this strategy? Would you support this immediate institution of this change in policy? What would you do differently?
Content Source: http://www.lasvegassun.com/news/2011/feb/28/sands-cuts-bait-comps/
14. Should internet gambling be legalized in the United States? Discuss impacts to all stakeholders including current U.S. casino operators, federal and state governments, and U.S. citizens.
15. Should casinos offer non-smoking sections for gamblers? Assume a non-smoking section existed within your casino. What action (if any) would you take, if you discovered that the profit per square foot in the non-smoking section was 20% below that of the smoking areas? Would you have any legal concerns related to employees working in a second-hand-smoke-filled environment (e.g., potential liability issues)?
16. In general, why do you think people gamble? How might your answer to this question be used to position the brand of a casino resort in the minds of existing and potential customers? How might your answer affect (1) the design and décor of a casino, (2) theoperation of the casino, and (3) the marketing activities of the casino?